08 Apr Chapter 13 Bankruptcy Feasibility

To get your Chapter 13 bankruptcy confirmed (approved) you’ll need to show that you’ve proposed a “feasible” plan. If you haven’t, your plan can’t be confirmed, and your case must be dismissed.

Chapter 13, unlike Chapter 7 (straight bankruptcy), is all about your plan. You submit a plan, and the plan must do certain things. We’ll leave all the other requirements of Chapter 13 for now and just deal with one of them: feasibility. I think of this as bankruptcy airlift. Can you get your case off the ground?

I see feasibility problems from time to time in my Charleston, South Carolina bankruptcy practice. Usually, this occurs when a client wants to save her home from foreclosure. I think of Chapter 13 as a tool, and one of the things the tool is good for is stopping a foreclosure and allowing the debtor to “cure the arrearage” on his mortgage. Put simply, it allows the debtor time to catch up on past due mortgage payments during the Chapter 13 plan.

So if you come to me and want to stop your foreclosure and cure a mortgage arrearage for $10,000, we’ve got to be able to show you can do that during your Chapter 13 plan. Can you begin making regular mortgage payments? Or is the payment itself to high? If the payment itself is too high, it’s not possible for you to pay the regular mortgage payment plus an additional amount to cure the arrearage. That plan is not feasible. Or, as we might say down here in Charleston, “that dog don’t hunt.”

There’s no bankruptcy out there–Chapter 13 or otherwise–that can increase your income. It can restructure your debt, but if you don’t have enough money to fund a plan, it won’t make money for you.

This leads me to one final point: when you deal with your financial situation, you need to throw in a heavy dose of reality. And in Chapter 13, that’s called “feasibility.”

Russell A. DeMott is a Charleston, South Carolina bankruptcy lawyer who represents consumer debtors in Chapter 7 and Chapter 13 bankruptcy. He is the author of the Charleston Bankruptcy Blog. He is also a member of the South Carolina Bankruptcy Blog. He files bankruptcy cases for clients in the Charleston, South Carolina division, which runs from Myrtle Beach to Beaufort. The DeMott Law Firm also represents clients in foreclosure defense and mortgage modification. You can also connect with Russ on Google Plus Russell DeMott. Russ can be contacted directly at (843) 695-0830 or by email at russ@demottlawfirm.com.